Publications of LGE Environmental Report

LG Electronics 2012 Environmental Report CONTENTS

04 / Environmental Report Overview Corporate Profile 06 / CEO Message CTO Message 08 / 2012 Highlights

10 / Green Initiative 18 / Cl imate Change 24 / Green Business Response Green Vision and Strategy Strategic Directions for Photovoltaics Solution Green Management System Climate Change Response Lighting Green Communication GHG Emissions Management Water Treatment Solution Global Volunteer Day Zero Energy America Project™ Smart Grid

15 19 23

46 / appendix

Data GRI Index Independent Assurance Statement Green Management History Publications of LGE Environmental Report

2 28 / products and 38 / Green Partnership 42 / resource Recycling Technologies Strategic Directions for Products Green Program Plus Use of Recycled Plastics with Greener Features Supplier Training e-Waste Management Management for Developing Products Green Partnership Activities Green Initiatives at LGEUS with Greener Features 2012 Achievements LGE's Energy-efficient Products

34 45

This report contains some “forward-looking statements” - that is, statements related to future, not past events. In this context, forward-looking statements often address our expected future business performance and intentions, and often contain words such as “expect”, “anticipate”, “intent”, “plan”, “believe”, “seek”, “see”, or “will”. Foward-looking statements by their nature address matters that are, to different degrees, uncertain. These uncertainties may cause our actual future results to be materially different from those expressed in our forward-looking statement in this report.

2012 LG Electronics Environmental Report 3 Environmental Report Overview

This report has been published by LG Electronics(hereinafter referred to as "LGE"). The aim of this publication is to promote communication with stakeholders about LGE’s green management performance and efforts to improve sustainability. This report has also been validated independently by a third-party agency : Korea Productivity Center. LGE's Environmental Report will be published as part of our ongoing efforts to promote green management and contribute to environmental protection initiatives.

Period This report is based on data from January 1, 2012 to December 31, 2012.

Scope The scope of this report includes both foreign and domestic (Korean) information. We are working to establish a world-wide environmental data management system to assist in information gathering.

Publication This is LGE's Environmental Report, published in July 2013. This report can be found on our website at http://www.lg.com/global

Audience This report targets LGE's stakeholders with an interest in the company's environmental performance.

References Environmental report guidelines from the Korean Ministry of Environment, the GRI(Global Re- porting Initiative) Sustainability Reporting Guidelines Version 3.1, and FTC(Federal Trade Com- mission) Complying with the Environmental Marketing Guide Part 260 were used as reference material.

Environmental report guidelines from the Korean Ministry of Environment, the GRI (Global Reporting Initiative) Sustainabil- ity Reporting Guidelines Version 3.1, and FTC (Federal Trade Commission) Complying with the Environmental Marketing Guide Part 260 were used as reference material Tel +82-2-526-4123 E_mail [email protected] For more information, visit LGE's website at www.lg.com/global

Business Areas and Key Product Families

Home Entertainment Mobile Communication

· LCD TV · PDP TV · LCD Monitor · Mobile Handset · Home Theater · Smartphone · PC · Audio & Video · Security System

4 Corporate Profile

Unit : KRW Billion (as of December 31, 2012)

Total Assets Organization Name LG Electronics, Inc. 31,457.4 (-1,201.1) (Consolidated)

Location of LG Twin Towers, 128 Yeoui-daero, Total Liabilities 18,753.2 (-757) Headquarters Yeongdeungpo-gu, Seoul, Korea (Consolidated)

25,427.2 (-2,669.9) Industry Manufacturing Parent [Korea : 7,833.4/ Sales Overseas : 17,593.8) TV, Home Theater System, BluRay Player, Consolidated 50,960 (-3,296.6) Mobile Handset, Laptop Computer, Re- frigerator, Washing Machine, Cooking Main Appliance, Built-in System Kitchenware, Parent 42.8 (+306.7) Products Operat- Vacuum Cleaner, Health Care Appliance, ing Air Conditioner, Monitor, Security System, Profits Consolidated 1,136 (+757) Commercial Display, etc. AA (Korea), Baa2 CEO Bon Joon Koo Credit Rating (Moody’s), BBB- (S&P)

Date of October 1, 1958 No. of Shareholders 213,750 Establishment 86,697 No.of Employees No. of Shares 180,833,806 [Korea:36,378/Overseas : 50,319]

*The calculation method for operating profits was revised in line with the changes to financial accounting standards in 2012, and past data was also revised accordingly. *( ) : Change in figures compared with the previous year

Home Appliance Air conditioner & Energy Solution

· Refrigerator · Washing Machine · Residential Air Conditioner · Kitchen Appliance · Commercial Air Conditioner · Vacuum Cleaner · Solar Energy Solution · Healthcare Appliance

2012 LG Electronics Environmental Report 5 CEO Message

With worldwide interest in environmental issues on the rise, corporate responsibilities have become increas- ingly important. Some companies fail to properly respond to these challenges, and significantly damage their sales; others successfully build their brand image among customers by meeting their environmental obli- gations. In proper perspective, environmental stewardship now entails far more than corporate slogans or mottos—it directly impacts the sustainability of a company. Thus, a company’s management philosophy or strategy should be developed to support emerging environmental standards.

Since declaring our corporate policy for a "Cleaner Environment" in 1994, we have consistently organized affiliated organizations and established an internal strategy to implement and expand green management within the company. In 2010, the LG Group announced "Green 2020" as a recommended blueprint for the direction of long-term prosperity for LG Group over the next 10 years.

According to this vision, LG Group plans to reduce 40% of greenhouse gas emissions per production unit and 30% of water use by 2020 compared to the base year 2009.

Second, LG Group will expand the proportion of low power, high efficiency products and develop environment-considered materials for application, thus establishing product leadership in the market. As a result, we will be able to reduce the amount of greenhouse gases generated through product use by 30 million tons and cumulatively by 0.2 billion tons by 2020.

Third, LG Group has established a goal to consistently strengthen green businesses and successfully generate at least 15% of revenues from them by 2020. To achieve this goal, we will pursue green values and concurrently lay the foundation for leading the market.

From now on, LGE will put forth its best efforts to create values for customers that will enable them to lead affluent lives in a healthier and cleaner environment. We sincerely look forward to your consistent interest, advice, and support.

July 2013 CEO and Vice Chairman of LG Electronics Bon Joon Koo

6 CTO Message

A key driving force behind technology innovation is the prevailing culture of the time. In today’s society, businesses need to become a leading cultural force that enriches people’s lives with competitive products. Such cultural leadership, supported by our products and technologies, will become the defining feature of a truly sustainable business in our times. With these perspectives, we are implementing "Greenovation" based on our green vision in order to meet the environmental needs of both our customers and the society.

Our company makes substantial investments in the development of competitive products and technology. We have reduced the amount of greenhouse gas emissions associated with production and product use, and voluntarily acquire carbon certificates as we consistently share our environmental dedication with customers. We have also developed and launched energy efficient products, an effort widely recognized for excellence all over the world. In 2012, our company succeeded in winning the "ENERGY STAR Partner of the Year” Award from the U.S. Environmental Protection Agency (EPA) for the second year in a row, and our 42-inch TV received the "Global Efficiency Medal" from Super-Efficient Equipment and Appliance Deployment (SEAD) in recognition of LGE’s excellent products and technologies.

Besides product innovation, we are also trying to reduce greenhouse gases emitted from our business sites or logistics, etc. We are bringing more high-efficiency energy facilities, and organizing energy supervision groups that operate continually within our company. During peak times of energy consumption, we execute power saving tasks and make multi-dimensional efforts to reduce energy use. Thanks to these efforts, we have been selected for four consecutive years as the most excellent company that responds to climate change by the Korean Carbon Disclosure Project.

In addition to these efforts, we are striving to strengthen our green businesses, which have emerged as our next-generation growth engines. We are currently focusing our efforts on building concrete foundations in photovoltaics solution, lighting, water treatment solution, and smart grid by participating in verification projects and conducting Open Innovation activities. We are committed to expanding these green businesses and will continuously develop the core competencies.

We are also making efforts to establish green growth with our business partners. Using the Green Program Plus (LGE’s green partnership program) since 2005, we have successfully managed the discharge of toxic materials and greenhouse gases of our suppliers. Furthermore, we are providing our employees and partners with relevant education in support of these activities.

Last but not least, we have significantly intensified efforts to recycle resources, using more recycled plastics in manu- July 2013 facturing, and implementing e-waste take back systems. We will fulfill our corporate responsibilities throughout the CTO and President of LG Electronics entire production process while carrying out basic business activities, such as sales and production. Skott Ahn LGE will continue to expand efforts to create a healthier and cleaner environment and an affluent life for all, in all aspects. Thank you.

2012 LG Electronics Environmental Report 7 Climate Change Response 29.65 million tons of GHG emissions from product use reduced (compared to the energy consumption in 2007). 113 thousand tons of GHG emissions associated with production reduced (compared to the emissions in 2008).

5% CO2 of water use intensity improved (compared to 2011). consecutive For 4 years, LGE has been a member of Carbon Management Global 2012 Leaders Club by Carbon Disclosure Project Korea. Highlights

Resource Recycling

174,482 tons of e-waste collected from Korea, Japan, Europe, U.S., and Australia. Products and Technologies

Global Efficiency Medal For Awarded for SEAD Large TV (over 42 inches) with LGE model 47LM670S.

consecutive The largest 2 number of years, Greenhouse Gas Emissions Certificates1 (as of April 10, 2013). LGE has been awarded the ENERGY STAR Partner of the Year from U.S. Environmental Protection Agency (EPA).

KRW10.9 billion of costs cut thanks to TV packaging improvement.

KRW3.7billion of costs cut thanks to mobile phone packaging improvement.

First in the world to win the Climatop 2 certificate for TV and washing machine.

1) Certified by the Korea Environmental Industry and Technology Institute (KEITI), with a total of 99 certificates as of May 31, 2013 2) Certified by Climatop Switzerland

2012 LG Electronics Environmental Report 9 Green 01 Initiative 1 Green Vision and Strategy · Green Vision · Green Strategy 2 Green Management System · Green Management-related Organizations and Decision Making System · Green Product Management System 3 Green Communication · Online · Offline

TV 디테일 살릴것

1. Green Vision and Strategy

Green Vision

LGE's green vision is to provide values that enhance the quality of life for its customers and create healthier and cleaner environment. Since it announced its environmental policy ‘Cleaner Environment’ in 1994, LGE has endeavored to expand its green management, which takes the environment into consideration throughout the entire course of corporate activities. To realize its green vision, LGE will strengthen its Greenovation activities. A compound word of Green and Innovation, Greenovation implies that LGE’s green vision and other environmental activities are all based on innovation. Through Greenovation, LGE will provide customers with affluent lives and create social and environmental values to society.

LGE’s Green Slogan ‘Life’s good when you live green’

10 Green Strategy

LG Group announced 'Green 2020 ' in April, 2010. Based on this, LGE established the five directions of green management strategy. LGE has set a goal of reducing GHG emissions from both production and product use, built a control system to aggressively response to the climate change, and will strengthen green business that is LGE's new growth engine for the future, such as photovoltaics solution and water treatment solution, etc. In addition, LGE is strengthening the competitiveness of its products by developing products with greener features, and is pursuing green growth together with * LGE's Environment Report is com- the suppliers by helping them build green management systems. Finally, LGE has built a piled based on the Strategic Direc- system to collect and dispose of e-waste and is making efforts to enhance recycling. tions of Green Initiative.

LG Group's 'Green 2020' Strategy

LG Group's 'Green 2020' Strategy Respond to climate change and seek sustainable management through green growth

KRW 20 trillion investments · KRW 10 trillion for green R&D · KRW 10 trillion for environmentally friendly facilities

Create Green Business Sites Strengthen Green Business Expand Products with Greener Features

% % · Reduce GHG emissions by 40 · Attain 15 of total group sales · Reduce GHG emissions from home by · Reduce water use by % in green business by 2020 30 million tons (accumulated to 200 30 million tons)

Strategic Directions for LGE’s Green Management

Greenovation

Low-Carbon Management Recycling Resource Responding proactively to 1 5 Measuring risks through climate change increasing resource efficiency

Green Business 2 4 Green Partnership Strengthening green Promoting green and business such as photovoltaics shared growth with its solution, LED, and water business partners treatment solution 3

Products with Greener Features Enhancing products’ competitiveness through developing greener features

2012 LG Electronics Environmental Report 11 2. Green Management System

Green Management-related Organizations and Decision Making System

LGE’s Green Management-related Organizations and Decision Making System

CEO

CTO

Green Technology Committee

Directed by : Green Strategy Department

Climate Green Materi- Change als Technology Response Associate Committee

Green Technology Committee LGE’s Green Technology Committee is a decision- making body for LGE's green management, which consists of CTO, R&D laboratory directors, and officers. The Green Technology Committee meets twice a year and shares the progress in green technology development, reviews technological applicability to products, and makes decisions about the way to go. Overall performance and plans of LGE's green management are reported to the top management team of LGE and LG Group regularly.

Contents of Operation Green Materials Climate Change Classification Technology Associate Response Committee Cycle On short notice Twice a year

Material developing staffs of the Team managers and working group Participant related department, Industrial in the related department Technology Institute, Design Center

Energy assessment and certification Seeking and sharing environment plans, and office GHG emission Details discussed considered materials and flagship control support plans for overseas technologies to develop business sites

12 Green Product Management System GPMS

LGE operates the Green Product Management System (GPMS) to manage environmental information on products and environmental risks associated with its products and business sites.

GPMS

HSMS

LIMS

CCMS

Environmental Declaration

Hazardous Substance Management System HSMS Through Hazardous Sub- Green Product Management System stance Management System (HSMS), LGE adds and manages hazardous substance information used in LGE products, ensures compliance with global environmental regulations (RoHS 3, 3) RoHS (Restriction of Hazardous REACH 4 , etc.), and monitors the use of hazardous substances in the products. LGE also runs an Substances in Electrical and Elec- online Q&A system to help its suppliers comply with the hazardous substance regulations. tronic Equipment)

4) REACH (Registration, Evaluation, Laboratory Information Management System LIMS By employing the haz- Authorization and Restriction of Che micals) ardous substance analysis service, called LIMS (Laboratory Information Management System), LGE performs product control for hazardous substance analysis and manages the final analysis data. This data is used in in-depth analysis for product QA (Quality Assurance) and risk management for the new hazardous substance regulations.

Corporate Carbon Management System CCMS By introducing CCMS (Cor- porate Carbon Management System), LGE performs analysis and assessment on GHG emission and energy consumption by LGE's business sites. LGE manages GHG reduction targets via the system so that they can be used for improvement. Also, it measures and manages GHG emissions produced throughout the product life cycle in order to measure Product Carbon Footprint (PCF) and ascertain carbon labels.

Environmental Declaration LGE has established Environmental Declaration IT system to provide customers with environmental information on its products. Target products include 17 product categories for U.S. markets, and mobile phones for European and Japanese markets. The information is available from its global website: http://www.lg.com/global/sustainability/ environment/greener-products/environmental-declarations. Environmental Declaration includes the size/weight of the products and packing materials, energy-related information, information on hazardous substances in a product, information relating to product disassembly/ reuse, a customer information service, and environmental label acquisition.

2012 LG Electronics Environmental Report 13 3. Green Communication

Online SNS / My Eco Home In May 2012, LGE launched a web page entitled 'My Eco Home' through Facebook. With 'My Eco Home', users can design a virtual home customized to their own tastes. The Eco Home consists of many products using LGE's own green technology such as the Linear Compressor5, DD Motors6, and many others. Facebook provides users with an easy and fun way to invite friends to visit and comment on their virtual Eco Home. SNS : My Eco Home 5) Linear Compressor : LGE's own technology that regulates the revo- lution and speed of the compressor based on the internal temperature Offline and the food storage, thus dem- onstrating better energy efficiency Education / Life's Green Class Life's Green Class is a social contribution program than the existing reciprocating com- offered by LGE in cooperation with Hanyang University, Korea since 2006. To bring environment pressors. and science education to children in remote areas, it offers a mobile science laboratory equipped 6) DD (Direct Drive) Motor : LGE's with high-tech devices. Since 2010 the class has been extending its service to Indian children in own technology that gets rid of the intermediate connectors in the mo- cooperation with the University of Pune, India. In 2012, LGE visited 39 schools in Korea and 64 tor of a washing machine and trans- schools in India to offer its service. Life’s Green Class offers explanations of scientific principles fers power directly to the wash- and uses the Science, Technology, Engineering, Arts, and Mathematics (STEAM) method that ing tub from the inverter motor installed directly thereto; thus, it is combines experiments, lecture, drama, and other elements. Its main programs include the 'Envi- possible to reduce water and power ronmental Science Drama' presented in a 9.5-ton trailer equipped with state-of-the-art scientific consumption as well as controlling instruments, and the 'Science Experiment' that gives children a better understanding of scientific diverse motions. principles by applying them in everyday life. LGE plans to run a 'Small Science Gallery' from 2013, which will perform various experiments relating to environmental issues to draw active participation from children.

Life's Green Class (Korea)

7) Since 2013, ‘Low Carbon Green Exhibition / Low Carbon Green Growth Exhibition 7 To give customers a Growth Expo’ has been renamed as hands-on experience of its competitive products and technology, LGE takes part in the Low Car- ‘ECO-Expo Korea’ bon Green Growth Expo which has been held annually by the Korean Ministry of Environment. From October 30 to November 2, 2012, LGE displayed its various products in the exhibition, including 3D TVs and air conditioners, refrigerators, robot vacuum, water purifiers and mobile phones, as well as its renewable energy solutions such as LED lighting, water treatment and smart grid, to demonstrate the positive influence LGE products and technology have on its customers and on the environment.

14 Photos from 2012 Low Carbon Green Growth Exhibition

Public Contest / Team ENERGY STAR Challenge LGE partnered with the U.S. Environmental Protection Agency (EPA) and youth organization 'DoSomething.org' in 2012, to host the EPA’s Team ENERGY STAR Challenge. The challenge encouraged American youth to share their energy-savings stories, and is part of EPA’s broader campaign designed to raise awareness for saving energy, money and protecting the environment with ENERGY STAR. There were nearly 500 entries in the contest which included 25 prize winners. Top prize winners were awarded a suite of prizes from LGE, including ENERGY STAR-certified electronic products, and were featured on LGE’s billboard in New York’s Times Square as part of a two-week ENERGY STAR 20th Anniversary celebration.

Team ENERGY STAR Challenge Featured on LGE's Billboard in New York's Time Square

Customer Communication in LGE Europe

European countries have more diverse and tight environmental regulations than other countries. Accordingly, the customers are highly aware of environmental issues. We have been running a Q&A system since 2009 to handle environment-related questions from customers gathered via various channels. The questions include : how products comply with certain EU environmental legislation on energy consumption, chemicals content and take-back etc. /

Environmental Specialist in LGE Europe Claudia Albuquerque

2012 LG Electronics Environmental Report 15 special page Global Volunteer Day

Europe China Event _ Tree Planting Event _ Cycle Ride at Historic Sites and Spain, Russia, Czech Republic, Austria, Parks, Tree Planting Portugal, Italy, Hungary, Greece, etc. Korea Event _ Tree Planting, Forest Clean-up 1,549 6,159 359

JAPAN Middle East Event _ Park Clean-up, Environmental Education Event _ Desert Clean-up, Paper and Power Saving Campaign 84 UAE, Saudi Arabia SOUTHEAST ASIA 190 Event _ Tree Planting, Forest Clean-up Taiwan, Thailand, Indonesia, Vietnam, etc. 5,325

Indonesia

LGE designated the United Nations’ World Environment Day (every 5th of June) as its own ‘Global Volunteer Day’. On that day every year, employees from Korea, U.S. Japan, China, Russia, Spain, and other countries voluntarily participate in a variety of activities to protect the environment. In 2012, more than 15,000 of LGE employees around the world participated in the event.

North America

Event _ Tree Planting, Wildlife Protection Campaign U.S., Mexico 1,303 South America Event _ Cycle Ride, Helping the Poor Peru, Chile 785

Korea Mexico Ukraine Climate Change 02 Response 1 Strategic Directions for Climate Change Response 2 GHG Emissions Management · Production Level · Product Use Level · Product Life Cycle 3 Promotion of Low-carbon Culture

1. Strategic Directions for Climate Change Response

LGE established the following strategic directions to respond to climate change : reduction of GHG emissions associated with production, reduction of GHG emissions associated with product use, reduction of GHG emissions across the value chain, and commitment to social responsibility based on promotion of low-carbon culture and has been making a wide range of efforts to deliver results.

Strategic Directions for Climate Change Response

Vision Providing Low-carbon value to customers through voluntary GHG emission reduction

Productivity Product Operational Social Enhancement Competitiveness Goal Efficiencies Contribution Low-carbon Product Low-carbon Factory Low-carbon Value Chain Low-carbon Culture Contribution to GHG Strategic GHG emission reduction GHG emission Engagement of emission reduction in at production sites Directives reduction over life cycle employees & community product usage

0.15M tons in 2020 30M tons in 2020 Reduction Management Top-tier performer Target (cumulated amount : (cumulated amount : by 2015 by 2015 1 million tons) 200 million tons) Infrastructure for effective GHG emission management

18 2. GHG Emissions Management

Production Level Management Standards and Scope LGE established internal standards based on international standards (i.e. ISO14064-1, GHG Protocol (WRI and WBCSD 8), 2006 IPCC 9 Guidelines) and manages GHG emissions accordingly. LGE also manages its GHG reduction performance by the Corporate Carbon Management System (CCMS10).

GHG Management Standards and Scope 8) WRI·WBCSD : World Resource Category Standards and Scope Applicable to Institute·World Business Council for Organizational 14 business sites in Korea and 30 overseas Sustainable Development Control Approach Boundary production subsidiaries 9) IPCC : Intergovernmental Panel on Stationary combustion, mobile combustion, Scope1 Climate Change (established under Operational process emissions, fugitive emissions Boundary the United Nations) Scope2 Purchased electricity and steam 10) More details on CCMS : p.13

Carbon Dioxide (CO2), Hydrofluorocarbons (HFCs),Perfluorinated Greenhouse Methane (CH4), Chemicals (PFCs),Sulphur Hexafluoride Gas Nitrous Oxide (N2O) (SF6),Hydrochlorofluorocarbons (HCFCs)

Reduction Target LGE has set a target to reduce 150,000 tons of GHG emissions associated with production by 2020 from the base year 2008 (10% reduction) through GHG reduction efforts, including production process innovation, facility/operation efficiency improvement, and renewable energy use. Based on the target, LGE expects to reduce a total of approximately 1 million tons (cumulative) of GHG emissions from 2009 to 2020.

Production Level Reduction Target and Performance Unit : K Ton/CO2e 11) BAU (Business As Usual) : Esti- Reductions Compared to BAU11 mated GHG emissions are based on Absolute Reductions the assumption that GHG reduction technology and policy are main- 113 150 tained at the current level.

1,463 1,350 1,313

Emissions

2008 2012 2020 Base Year Target Year

Selected into Carbon Management Global Leaders Club by CDP Korea

Since 2008, LGE has been joining the Carbon Disclosure Project (CDP) as part of its efforts to strengthen corporate sustainability and enhance socially responsible investment through low-carbon management. We were named as a member of the Carbon Management Global Leaders Club in 2012 for the four consecutive years and recognized as one of the top Korean businesses with outstanding carbon disclosure and reduction performance. In particular, LGE was the only participant to receive the full 100 points in the public disclosure section and ranked top in the discretionary consumer goods section.

2012 LG Electronics Environmental Report 19 Key Progress and Activities LGE reduced 113,000 tons of GHG emissions asso- 12) ISO50001 : A specification cre- ciated with production through diverse reduction efforts, including production process en- ated by the International Organi- zation for Standardization (ISO) for hancement, facility/operation efficiency improvement, and renewable energy use. LGE also an energy management system. acquired the ISO5000112 for all its production sites and major R&D facilities in Korea to establish The standard specifies the require- management systems for energy and GHG reduction in 2012. ments for establishing, implementing, maintaining and improving an energy management system. Facility/Operation Efficiency Improvement | LGE continuously works to improve the 13) BdMS (Building Management efficiency of its facilities and production processes and carries out activities such as optimizing System)

the capacity/control (of motors, pumps and utility equipment of cooling towers), enhancing the 14) BPAM (Building Performance differential pressure of air compressors, minimizing idle operations, and optimizing the washing Analysis Management System) : An algorithm designed specifically for process. energy control/monitoring/analysis

Investment in High Efficiency Equipment | LGE is currently in the process of replacing the lighting systems at its production sites with LED systems (Invested KRW 5 billion and reduced Solar Panels Installed at the 1,200 tons of GHG emissions in 2012). LGE also invests in automatic control systems such as Gumi 3 Plant BdMS 13 and BPAM 14 to gain greater control during peak demand hours and to reduce GHG emissions.

Increased Use of Renewable Energy | LGE continues to expand renewable energy use at its business sites with solar panels and small-sized wind turbines. As of 2012, the combined capacity of solar power generating systems at our business sites reached 202kWp (cumulative).

Product Use Level Reduction Product Use Level Target and Performance LGE plans to contribute to the reduction of GHG emissions associated with Unit : K Ton/CO2e Reduction Target product use by developing and introducing highly energy efficient products. LGE has established a Contributions to Reductions target to reduce 30 million tons of GHG emissions from BAU by 2020. LGE is estimated to contribute Compared to BAU to a total reduction of about 200 million tons (cumulative) of GHG emissions associated with product use from 2008 to 2020. 30,000 Key Progress and Activities In 2012, LGE contributed to reducing 29.65 million tons of 29,650 GHG emissions associated with product use (compared to the energy consumption level of 2007) by introducing a large number of highly energy efficient products. Reduction

Product Carbon Footprint Disclosure | To help customers realize the amount of GHG emissions produced throughout a product’s life cycle, LGE provides information of the carbon footprint of some product models and is voluntarily acquiring carbon labels. (More details on carbon labels : p. 34-35) 2007 2011 2020 Base Year Target Year Clean Development Mechanism (CDM) | LGE is proceeding with the Clean Development Mechanism (CDM) project, through which LGE plans to acquire carbon credits in exchange for the sales of highly efficient refrigerators. LGE' initiative was approved by the Indian government in April 2010 and is currently undergoing a registration process with the United Nations Framework Convention on Climate Change (UNFCCC). Through this project, LGE expects to secure 680,000 tons of Certified Emis- sions Reductions (CERs) annually over the next ten years.

20 Product Life Cycle Support for Suppliers’ GHG Management In 2010, LGE established and announced a plan to expand its low-carbon procurement. Based on the plan, LGE will expand its annual purchase from suppliers that implement sustainable GHG reduction plans up to KRW 50 trillion by 2020. To this end, LGE will continually expand support to suppliers to strengthen their GHG management ca- pability (i.e. GHG management training and assistance for GHG inventory/monitoring system setup) and plan to provide GHG management tools and guidelines.

Office Building GHG Management Since 2008, LGE has managed GHG emissions from office buildings in Korea. In 2011, a total of 9,377 tons of GHG was emitted from LGE’s office buildings, including the leased office spaces that consists of more than 100 fulltime employees (Twin Towers and Seoul Square in Korea). Following the announcement of LGE’s U.S. subsidiary (LGEUS) for office building GHG management in 2011, LGE’s European subsidiaries also announced a plan in 2012 to reduce 15% of GHG emissions from their office buildings by 2020 from the base year 2008. LGE’s European subsidiaries plan to achieve the target by using electricity generated with renewable energy sources.

GHG Management for Logistics The total GHG emissions from logistics activities in Korea amounted to 42,344 tons in 2012. LGE makes ongoing efforts to reduce GHG emissions from its logistics activities through energy conservation at warehouses and logistics efficiency improvement. LGE will continuously make diverse efforts to establish an innovative logistics system, including transport system innovation, energy use optimization and IT system implementation.

Water Use Management

LGE set a target to reduce 20% of water use by 2020, compared to 2007 (intensity target per revenue in KRW). To this end, LGE is implementing a wide range of reduction efforts to manage water use and reuse, such as adjusting water pressure, preventing/fixing leakages (replacement of pump seals/packing/old parts), and launching a water conservation campaign (en- couraging employee dormitory residents to do large loads of laundry and to take shorter showers). In 2012, LGE established a water inventory of its production sites in Korea and completed third party verification of the data. LGE plans to continuously expand the scope of water management. A total of 11,544,000 tons of water was used in 2012, down 10% from to the previous year.

Water Use (Global) Unit : K Ton

2010 2011 2012

12,128 11,544 12,913

2012 LG Electronics Environmental Report 21 3. Promotion of Low-carbon Culture Carbon Reduction Campaign

LGE has a number of campaigns that encourage employees to participate in its efforts to reduce GHG emissions and energy consumption in their daily activities at work. At LGE’s production sites, employees organized an "Energy Watchdog" to check for electricity waste and steam leaks, and to turn off power switches to reduce energy loss. To commemorate World Environment Day 2012, for example, LGE Ko- rean employees helped replace light bulbs with LED for a rehabilitation center in Changwon and participated in a tree planting event at Mt. Jeongbyeong in Korea. Based on such efforts, LGE raises awareness of climate change and encourages its employees to make changes in their everyday lives.

Climate Change Training LGE conducts climate change training to raise awareness of the issue among employees, to encourage changes in their behavior, and to increase employees’ understanding of green initiatives in LGE. Starting with Korean employees in 2009, the online climate change training was expanded to over 20,000 office employees at overseas subsidiaries (including U.S., China, European regions etc.) in the following year. In 2011, the program was further expanded to suppliers with over 500 employees from 120 suppliers. LGE also included climate change in the curriculum for its regular offline training provided to suppliers. In 2012, 228 supplier employees completed the program on climate change and the corporate response strategies. (More details on supplier training : p.39)

Engagement with Stakeholders In order to contribute to efforts by global industries to address climate change issues, LGE actively participates in initiatives led by international organizations, including the United Nations. Since 2010, LGE has worked as a steering committee member of “Caring for Climate,” one of the initiatives from the United Nations Global Compact, and also as an active member of the EICC’s Environmental Sustainability Work Group. In February 2012, LGE joined the U.S. Environmental Protection Agency's Green Power Partner- ship, a voluntary program to encourage organizations to use renewable energy and reduce their carbon footprint. LGE also signed a memorandum of understanding (MOU) with the U.S. EPA, agreeing to collaborate with U.S. government agencies on a number of initiatives to help protect the environment. In November 2012, LGE partnered with Climate Counts, a non-profit organization that rates companies on their efforts to address solutions for global climate change.

Green Initiatives of European Subsidiaries

•LGEUK Installed Solar Panels LGEUK (United Kingdom) established sustainable management as its key management goal in 2010 and has implemented diverse green initiatives, including reduction of GHG emissions. As part of its efforts, LGEUK installed 120 solar panels on the rooftop of its HQ building in 2011. The system produces 92,627 kWh of power annually, approximately 7% of total energy consumed at the facility.

•LGEPT Participated in Forest Project Since 2011, LGEPT (Portugal) has participated in a forest project called “Cascais Natura”. The subsidiary planted trees at the Sintra-Cascais Natural Park (Parque Solar Panels Installed at the East Wing Sintra-Cascais Natural) in exchange for carbon credits and offsets the carbon emis- of LGEUK HQ sions associated with the power use at its training center.

22 special page Zero Energy America Project™

Since September 2012, LGE has participated in a Zero Energy America Project™ with Marc Rutenberg Homes, the U.S. housing construction company. “Zero Energy House” refers to a building with zero-net energy consumption and zero carbon emissions annually. Such buildings offset the energy they consume by minimizing energy consumption and generating power with renewable energy sources. The project’s first zero energy house was completed in November 2012 in Tampa Bay, Florida, which features air conditioning system, LED TV and solar panels from LGE.

Concept Design for Zero Energy America Project™

Product Suppled by LGE

Solar Panel

High Efficiency High Efficiency Appliances Air Conditioning (TV, Washing Machine, etc.) System for Healing/Cooling

Underground Walls / Floor : Insulated Geothermal Energy. Fuel, Cellmetc. Window : Triple Glazed Glass 03Green Business 1 Photovoltaics Solution 2 Lighting 3 Water Treatment Solution 4 Smart Grid

1. Photovoltaics Solution

With its production line of 120MW/year in the Gumi 1 Plant, LGE began to manufacture both solar cells and solar modules in 2010, and expand it to 420MW in 2013, supplying solar modules to 32 countries around the world. Accumulated sales from 2010 to 2012 are over 1.6 million sets. LGE photovoltaic products have a power generation warranty of 25 years. In order to produce products that deliver stable performance for such an extended period of time and to facilitate continuous quality improvement, LGE internally developed Severe Environment Test and utilizes the test to manage product quality. LGE currently focuses its investments on developing high efficiency solar cells, and these investments are producing promising results. In 2012, LGE succeeded in developing Type P crystalline silicon solar cell, which achieved 20.7% of energy conversion efficiency, as well as high efficiency Type N solar cell. In 2013, LGE also succeeded in mass production of the MonoX NeON series with the maximum output of 300W using the Type N solar cell technology.

LGE Solar Module

24 2. Lighting

In line with its decision to develop LED lighting as one of its key growth engines, LGE consolidated all lighting businesses from affiliates under LGE. LED lighting is managed as part of its building interior/exterior solutions business along with HVAC (Heating, Ventilation, and Air Con- ditioning) system and building management system. In October 2012, all lighting products from LGE’s plasma lighting system series acquired the NEP (New Excellent Product) Certification from Korea Ministry of Trade, Industry & Energy. Unlike existing lighting products, the plasma lighting system series does not contain electrodes, which enables the products to maintain a consistent level of brightness throughout their life cycle. These products also contain no mercury. In December 2012, LGE's LED Testing Lab was certified by the U.S. UL (Underwriters Laborato- ries) as an official testing facility for LED lighting products and converters. This allowed LGE to perform safety/certification tests internally as well as to conduct CSA (Canadian Standards As- sociation) certification tests.

1 2

1_ UL CTDP (Client Test Data Program) Certificate 2_ NEP Certificate

LGE Replaced Twin Towers Lighting System with LEDs

LGE’s headquarters LG Twin Towers underwent remodeling between 2010 and late 2011. During this period, LGE replaced the building’s entire lighting system with LEDs. LGE also implemented a touchscreen-type automatic lighting control system that works in conjunction with composite sensors to control the brightness based on the ambient light.

Comparison of Monthly Energy Consumption at Twin Towers (Before/After Remodeling)

* Figures presented in this graph LED Lighting 32% are based on data from a single Automatic Lighting floor (7th). Data was estimated by % Energy Saving by 9,106kWh 26 control system comparing energy consumption and =956,113 KRW/month type/number of lighting fixtures be- % fore and after the remodeling. 3,746kWh 58 =393,309 KRW/month

Before remodeling After remodeling (September 2010) (June 2012)

2012 LG Electronics Environmental Report 25 3. Water Treatment Solution

Comprised of all processes that are associated with producing clean water, the water treatment solution business is a green business that LGE has designated as one of its future growth engines. Servicing the public and industrial sectors, LGE’s water treatment solution business provides total solutions including development and production of membranes15 (key product used in water treatment processes), water disposal and reuse, water supply for industrial processes, and design/procurement/construction/operations of water treatment plants. In July 2011, LGE signed a contract to launch a joint venture with Hitachi Plant Technologies. And the following month, LGE acquired Daewoo Entec (renamed as HiEntech) which specializes in operations and management of water treatment facilities. In addition, LGE signed an MOU (strategic partnership for environmental business projects) with Daewoo E&C to jointly pursue business projects, 15) Membrane : A thin film-like (liq- exchange technologies, and have been collaborating on strengthening presence in the water uid or solid) structure that separates treatment industry worldwide. HiEntech also established a subsidiary (water treatment facility mixtures by filtering specific sub- management and operations) in Tianjin, China and explores opportunities in global projects. stances

1_ Signing Ceremony of LGE-Daewoo E&C MOU on Water Treatment Solution 2_ New Environmental Technology Certificate for Membrane Product 1

26 4. Smart Grid Since 2009, LGE has participated in a smart grid pilot project led by the Korean government as * What is Smart Grid? A smart grid is a modernized electrical grid the prime leading company of a consortium, and is currently leading the project in Gujwa-eup, that uses information technology Jeju Island, Korea (440 households). LGE also became the first Korean company to take part in to optimize energy efficiency. On a smart grid pilot project in Germany. In addition, LGE also signed an MOU with the U.S. based a smart grid, appliances automati- Pecan street, Inc. to cooperate in smart grid pilot projects. Based on the agreement, LGE will cally choose off-peak hours to operate, and customers can check their participate in a pilot project from the latter half of 2013 and review the performance of LGE's energy bills real-time via an energy smart grid products (including air conditioning system, refrigerator, washing machine, HEMS management device. (Home Energy Management System) and LED lighting) installed at the residence of project participants.

Status of Smart Grid Pilot Project Participation

Pamona, California, U.S.

Gujwa-eup, 20households Jeju-do, Korea · Home Energy Storage System 440 households · Smart Server Aachen, Germany · Smart TV · Smart Refrigerator · Smart Washing Machine 5 households · Smart Air Conditioner · Smart Server · Heat Pump · Smart Refrigerator · Solar Light · Smart Washing Machine · LED Lighting

2012 LG Electronics Environmental Report 27 Products and 04 Technologies 1 Strategic Directions for Products with Greener Features 2 Management for Developing Products with Greener Features · Green R&D Investments · Performance Evaluation 3 2012 Achievements · Products · Technologies

1. Strategic Directions for Products with Greener Features

LGE has set a strategy to develop products that reduce environmental impacts created throughout the life cycle of the products. It is classified into three categories : human, energy, and resources. First, to reduce the environmental impacts on humans, LGE is making steady efforts to reduce hazardous substances used in its products while introducing low-noise technology and anti- allergy features into the products to promote more comfortable and healthier lifestyle. In addition, LGE is striving to reduce GHG emissions from product use by improving the energy efficiency of its products. Finally in the product developing phase, LGE is making efforts to reduce resource consumption by reducing the weight or volume of its products and using recycled materials.

Strategic Directions for Products with Greener Features

Human Energy Resources

Hazardous Sub- Home Resource Recyclability Energy Efficiency CO2 Reduction stances Reduction Environment Reduction Improvement

· Reduce use of · Decrease product · Reduce power · Use renewable · Reduce weight and · Use recyclable heavy metals noise and vibration consumption energy volume of products materials · Phase out certain · Reduce stand-by · Reduce CO2 emis- · Use recycled · Design for easy hazardous materials power consumption sions throughout materials disassembly product life cycle

28 Products and Human Technologies Hazardous Substances Reduction LGE complies with international 04 regulations on hazardous substances including RoHS and REACH. Although some 1 Strategic Directions for Products substances are not currently regulated, LGE is in the process of voluntarily replac- with Greener Features ing substances, including PVC16 and BFRs17, after safety and reliability tests indi- 2 Management for Developing cate that it is safe to do so. (http://www.lg.com/global/sustainability/environment/ Products with Greener Features management-of-hazardous-substances) · Green R&D Investments Hazardous Substances Replacement (as of April 30, 2013) · Performance Evaluation Product Substance Performance 3 2012 Achievements PVC Not used in any new product models from 2010 · Products BFRs Not used in any new product models from 2010 Mobile · Technologies Phone Beryllium, Phthalate, Antimony Not used in any new product models from 2011 Trioxide

Currently replacing PVC from LCD panel, replaced PVC from internal PVC TV wire of 32 models (among 157), which will be released in 2013 BFRs Started replacing exterior molding (products in the European market) 16) PVC (Polyvinyl Chloride) : Ther- Monitor PVC, BFRs Replaced PVC and BFRs from cabinet, back cover, stand, etc. mo plastic, also known as polyvinyl Housing, FET, RLC, IC, CPU, main chipset,VGA chipset, LCD, Hard Disk chloride and polyvinyl chloride resin, PC PVC, BFRs Drive (HDD), Optical Disk Drive(ODD), Solid State Drive (SSD), Memory, containing heavy metals such as Webcam, Packing & C-kit, etc. phthalate(an environmental hor- mone), lead and cadmium. Replaced PVC and BFRs from the housing of all product models 17) BFRs(Brominated Flame Retar- released in 2011. Replacement is in progress for each parts, starting Labtop PVC, BFRs dants) : Mainly used as a chemical from CPU through main chipset, LCD,hard disk drive (HDD), optical disk drive (ODD), memory, webcam, LAN parts for micro circuits, etc. flame retardant for plastics and textiles and one of the most well- Air con- Replaced PVC from drain pipes for the indoor unit of residential air PVC known persistent organic pollut- ditioner conditioners developed in 2011(Released in Korea in 2012) ants.

18) Inside Care® System : Instead Home Environment LGE adds anti-allergy and anti-bacterial features of using chemicals to sterilize tap to some of its products, such as washing machines, air conditioning systems and water, this technology uses the ion- vacuum cleaners to improve the living environment for its customers, and is con- ized sterilizing water produced from electrolysis to ensure safe steriliza- stantly working to reduce noise and vibration produced by its products. All of LGE's tion of water up to the point that it TROMM steam washing machines are approved by the British Allergy Foundation (BAF). LGE’s reaches the customer's mouth. bed cleaning vacuum cleaners that were released in 2013 were certified for the removal of fine dust by the German SLG (Schubert Leiter Geratesicherheit) certification organization. LGE's water purifiers use stainless steel in their warm/cold water tanks as well as the purifier tank to reduce bacterial breeding compared with the plastic tanks available on the market. The Inside Care® System15 developed solely by LGE obtained the Sterilization S mark from the Korea Testing & Research Institute (KTR). Energy Energy Efficiency LGE established a technology roadmap (TRM) and set goals for each of its product categories, striving to hit every milestone. All of LGE’s products fully comply with international energy regulations, including ErP (Energy related Products). LGE also established internal strategies and targets concerning energy issues to reduce energy consumption and standby power consumption.

2012 LG Electronics Environmental Report 29 CO2 Reduction LGE helps its customers to lead low-carbon lifestyles by measuring the carbon footprint of a product and informing customers how much GHG is emitted when they use a particular product. Additionally, LGE is making efforts to reduce GHG emissions associated with its business operations (more details on GHG emissions associated with product use : p. 20).

Resources Resource Reduction From the product development phase, LGE works to enhance material quality and product structure, and strives to improve product performance while reducing the size and weight based on collaboration with recyclers. Based on such efforts, LGE was able to achieve 10kg weight reduction in its 2012 washing machine model (Model : FR4960MQ1TZ) from the previous year’s (FR4349BAYZ).

1 2 Recyclability Improvement Before developing a product, LGE consid- 1_FR4349BAYZ ers and evaluates environmental issues including ease of disassembly and recy- Year of production _ 2011 clability of the product. LGE also carries out R&D activities to reduce the size and Washing/drying capacity _ 13kg/8kg weight of its products while improving their performance. Size (WxHxD) _ 645X1, 135X790mm Product weight _ Approx. Strategic Directions for Improving Product Recyclability 100kg

2_FR4960MQ1TZ Year of production _ 2012 Washing/drying capacity _ Strategic Directions for Improving Product Recyclability 19kg/10kg Size (WxHxD) _ 700X1, 360X770mm Product weight _ Approx. 100kg

Design for easier Design for better Design for part identifica- disassembly better material tion / accessibility recyclability

Packaging LGE considers environmental factors in developing packaging materials as well as in developing its products. In June 2012, LGE established guidelines for reducing the weight and volume, reuse, and recycling of packaging materials (LGE Green Packaging Design Guidelines). The guidelines are applied at the packaging development phase of TV (HE Company) and Mobile Phone (MC Company) products. For new TV products released in 2013, LGE was able to reduce the use of packaging materials by 4.6% despite an increase in product size, while reducing 20.1% of packaging materials for mobile phone products by reducing the size of product package for some of its products. It is estimated that such efforts also resulted in cost savings of KRW 10.9 billion for TV products

and KRW 3.7 billion for mobile phone products. LGE plans to continue using LGE Green Packaging Design environment-considered packaging for more products in 2013. Guidelines

30 Package Size Improvement Case

TV : all new models to be released in 2013 Mobile Phone : Verizon S5ype (VS660) → B8H (VS840) 3D Glasses Accessories

Accessories 3D Glasses

Reduced the thickness of the buffer Reduced the size of accompanying items and replaced the for the accessory compartment hard copy manual with the online edition

Use of Recycled Pulp in Packaging Paper Stocks

In 2012, LGE made inquiries to paper mills that supply packaging paper stocks used for our TV and mobile phone products and built a database that lists recycled pulp content of each paper stock. LGE was able to achieve 80.1% of recycled pulp content for TV product packaging stocks and 70.6% for mobile phone packaging stocks using the database. Based on the database, LGE plans to continuously increase the recycled pulp content of the paper stocks used in LGE product packaging.

* Applied to all new TV models to be released in 2013 and 10 signature mobile phone models

2. Management for Developing Products with Greener Features Green R&D Investments

LGE tracks and manages its investments towards developing products with greener features. Invest- ment areas are divided into Human, Energy, Resources (the three strategic directions for products with greener features) and Infrastructure. Since a large portion of LGE’s R&D efforts takes place in Korea, LGE focuses on tracking and managing the spending for the R&D centers located in Korea. In 2012, LGE invested KRW 678 billion in Green R&D with research projects on reducing product energy consumption and extending product life making up the largest portion.

2012 R&D Investments in Developing Products with Greener Features (Korea)

Infrastructure Total Investment KRW 2% Energy 43% 678 billion Resources 48%

Human 7%

2012 LG Electronics Environmental Report 31 Performance Evaluation Eco Index The Eco Index is LGE's own tool for evaluating the environmental quality of its products in order to manage the environmental performance of products and set goals. LGE prepared the criteria for rating the Eco Index in accordance with strategic directions for products with greener features which is used in product development. LGE updates these rating criteria according to external environmental regulations and trends every three years and from 2013, the updated version will be used for managing products' environmental performances. As of now, all of LGE products meet the standard of Green 1 Star, which is of the same level as the environmental regulations (RoHS , REACH, etc.) commonly applicable to Korea, U.S., EU, and Japan. The products that meet the higher standards are classified as Green 2 Star (in compliance with the internal standards, current level of Energy Star) and Green 3 Star (in compliance with the internal standards of the goal of LGE's energy efficiency improvement strategy). In 2012, LGE increased the portion of Green 2 Star products from 92% to 93%, and Green 3 Star products from 45% to 76%. LGE is dedicated to continuously increasing the number of products that satisfy higher Eco index standards.

Eco Index Ratings Development of Products with Greener Features Based on Eco Index (Cumulative) Unit : %

Green Green 1 Star · Meets Green 2 Star criteria 29 8 7 Green 2 Star 3 · Meets the internal standard established for high Green 3 Star Star energy efficiency strategy 47 17

76 Green · Meets Green 1 Star criteria 54 2 · Meets LGE's internal standards equivalent to Star ENERGY STAR 45 Green · Complies with local environmental More Energy regulations and meets the criteria * The figures are calculated Efficient 1 for environmental labels and certi- Star by weighting the percent- fications 17 age of each product cat- · Meets LGE's internal standards for egory from the previous each local market years' sales 2010 2011 2012

Life Cycle Assessment LCA Regulated by the ISO14040 series standards, the LCA is a technique to assess and quantify environmental impacts associated with all the stages of a product life cycle (from production to distribution, use, and disposal), as well as to identify areas for improvement and to verify progress. Since 2002, LGE has worked to quantify the environmental impacts of its product categories throughout their life cycles and to reduce their carbon footprint. In 2011, the company built the Life Cycle Inventory Database (LCI DB) for eight products (TV, monitor, washing machine, refrigerator, LED, solar panel, mobile phone and commercial air conditioning system). And in 2012, LGE assessed the carbon footprint of six product categories and disclosed the data on its website (URL ▶http://www.lg.com/global/sustainability/ environment/low-carbon-green-management/expansion-of-low-carbon-management). Based on the results of the LCA, LGE identifies environmentally vulnerable areas in the product life cycle and determines appropriate measures, for example raw material replacement and energy efficiency improvement. LGE continues LCA on its main models based on the database already built.

32 3. 2012 Achievements

Products Energy Efficiency Improvement Korea : Prime Minister’s Prize, Energy Winner Awards | LGE’s Green Smart Store Energy Saving System was awarded the Prime Minister’s Prize, the top honor at the Energy Winner Awards. The Green Energy Saving System, which was developed specifically for convenience stores (Korea) that consume a large amount of power, adopted waste heat recovery. The system’s smart energy technology automatically adjusts indoor temperature and brightness to an optimal level and thus greatly improves energy efficiency. In addition, LGE's Real 4D Ultra-efficient air conditioner received the Minister of Trade, Industry and Energy’s Prize (Grand Prize), LED bulb (replacing 60W incandescent) won the Energy Technology Prize, and DIOS refrigerator, electric oven, portable LED projector and air cooled scroll inverter chiller (M Chiller) were honored in the Green Device Category.

Product that Received the Energy Winner Awards

Award Criteria/Scope Product Model Prize VAC Outdoor Unit : LRC-N1450D, Refrigeration Green Smart Store Outdoor Unit : LRC-v1000D Prime Minister's Energy Saving System Gateway : PEM-GSCD0 Prize Energy Winner (Product) Manager : PEM-EGBD0, Serve : PEM-SAAA10 Minister of Trade, Real 4D Ultra-efficient FQ165PLCW, FQ185PZCW, FQ185PLCW Industry and Air Conditioner (Standing) Energy's Prize Energy LED Bulb(Replacing 60W A1914FC1DG1 - Technology Incandescent) DIOS Refrigerator R-T762EHCRS - Appliance Electric Oven MA921SBT/SWT/SST/SVT - Green IT - Device Portable LED Projector PB61K-JE Air-cooled Scroll Inverter ACHR0209BA1(20RT) ACHR0409BA1(40RT) HVAC - Chiller (M Chiller) ACHR0609BA1(60RT)

Europe : Global Efficiency Medal, SEAD19 | At the IFA 2012 (International Electronics Fair held annually in Germany) Award Ceremony, LGE’s Cinema 3D Smart TV (Model : 47LM670S) received the Global Efficiency Medal in the category of large screen TV (over 42 inches) and the Emerging Technology category from the SEAD (Super-Efficient Equipment and Appliance De- 19) SEAD (Super-Efficient Equip- ment and Appliance Deployment): ployment), the multinational initiative for energy efficiency. The Cinema 3D Smart TV achieved A five-year international initiative high energy efficiency with “Local Dimming Technology (controls individual LEDs for maximum under the Clean Energy Ministerial energy efficiency)”, “Smart Energy Saving Technology (reduces energy consumption by adjusting and the International Partnership for to the ambient light)”, and the placement of backlight units (minimizes the number of backlight Energy Efficiency Cooperation. The SEAD Initiative assesses energy ef- units by placing them at the bottom). ficiency of electronic products sold in Australia, Europe, India and North America, and presents awards to products that achieved high energy efficiency. The product category under evaluation changes annually, SEAD Global Efficiency Medal and the category for 2012 was TV. awarded model: 47LM670S

2012 LG Electronics Environmental Report 33 U.S. : ENERGY STAR | ENERGY STAR is a widely recognized and trusted international standard established by U.S. Environmental Protection Agency (EPA) of the United States and the U.S. Department of Energy(DOE) to promote energy-efficient products. The ENERGY STAR Service Mark is placed on all products that meet the demanding standards. In 2012, over 1,000 LGE product models, including TVs, refrigerators, and washing machines earned the ENERGY STAR Service Mark, a 140% increase from the previous year. Additionally, ENERGY STAR Most Efficient 2012, which is awarded to the top 5% most efficient products every year, was awarded to 79 of the qualified models, a six fold increase from 2011.

Percentage of LGE Products (Available in the U.S.) Number of Product Models Named ENERGY STAR Most with ENERGY STAR Unit : % Efficient 2012 Unit : Models

● Air conditioner 8 ● Washing machine TV 74 ● Refrigerator 11 ● TV Refrigerator 99 Washing 7 100 Machine 53 Air Conditioner 66

Dish Washer 100 Increased by times Display 91 2 6 3 8 Lighting 22

* All electric/electronic products shipped to U.S. must be registered to DOE 2011 2012 (Department of Energy) and CEC (California Energy Commission) before they can be sold.

LGE Named as the 2012 ENERGY STAR Partner of the Year

LGE was awarded the 'Energy Star Partner of the Year' award for two consecutive years in 2012 and 2013. Hosted by U.S. Environmental Protection Agency (EPA), this award is granted to the businesses of the Energy Star partners that show an outstanding performance 1_ ENERGY STAR Partner of the Year Awards Ceremony by active participation in energy saving activities. 2_ ENERGY STAR Partner of the Year Logo

Reducing GHG Emissions Korea : Greenhouse Gas Emissions Certificate and Low Carbon Product Certificate | The Carbon Footprint Labeling program quantifies GHG emissions associated with all the stages of a product's life cycle (production, transport, use and disposal) and discloses the information on a label. In 2012, 48 of LGE products acquired the Greenhouse Gas Emissions Certificate, and 10 of LGE products received Low Carbon Product Certificate awarded to products that produce less GHG emissions compared to existing products and requirements. (URL ▶http://www.edp. or.kr/carbon/english/main)

34 2012 Low Carbon Product Certificate Acquired Models (as of December 31, 2012) Low Carbon Product Certificate Acquisition Case Unit : CO2e Reference Certified Reduction Compared with the Reduction Product Model Model Reference Model/term of use Rate

Water WHD71RB3R 151kgCO2e / 5years 16.5% WQD71RW1 Reference Model FNQ182FASV purifier WHD71RW3R 151kgCO2e / 5years 16.5% 8,120

Dish washer D1220MF D1265MF 93kgCO2e / 5years 8.4% Certified Model MA921NBS 30kgCO2e / 7years 5.3% Light wave FNQ236LANW 46.4% MP929NPS MA922MBN 31kgCO2e / 7years 5.5% oven 4,350 MA921NWS 30kgCO2e / 7years 5.3% Certified Model Refrigerator R-T759MHHGP R-T751EBHSL 217kgCO2e / 7years 12.5% FNQ256LANW % Drum wash- 44.6 FR3228WA FR4349EAZ 56kgCO2e / 5years 9.0% 4,500 ing machine Air FNQ236LANW 3769kgCO2e / 7years 46.4% FNQ182FASV conditioner FNQ256LANW 3619kgCO2e / 7years 44.6%

U.S. : CarbonFree® | The CarbonFree® Product Certification verifies the GHG emissions associated with a product’s life cycle and provides certification to products offering carbon off- setting and GHG reduction. In 2012, LGE acquired the CarbonFree® certification for 15 of its 20) This is calculated as: carbon products, which raised the total number of certified product models to 32. The combined carbon emissions throughout the whole life reductions from the 15 newly certified LGE product models are estimated to be approximately cycle of the 15 certified products x 80,000 tons20 . (URL ▶http://www.carbonfund.org) estimated annual sales of the model in U.S. market. The estimated sales is calculated for one year from the 2012 CarbonFree® Product Certification Acquired Models (as of December 31, 2012) point of certification, and is re- Product Number of Products Product Model newed every year. Category Certified in 2012 Monitor 1 29EA93 Refrigerator 1 GR-J318LSJP LG260S1C, LG255S1C, LG250S1C, Solar Cell 5 LG245S1C, LG265S1C Vacuum Cleaner 1 VR6270LVM Washing Machine 1 WM8000HVA Mobile Phone 4 LG730, LS860, LS970, E970 TV 2 55EA8800 / 55EM9700

Switzerland : Climatop | The Climatop Label is awarded to products and services that have achieved a reduction of over 20% of GHG emissions compared to other products and services in the same category. In 2012, LGE TV (Model: 47LM760S-ZA) and washing machine (Model: F14A8QDS) acquired the Climatop Label, the 1 2 world’s first in their respective categories. (URL ▶http://www.climatop.ch)

1_ 47LM760S-ZA 2_ F14A8QDS Technologies Korea : Certification of Green Technology | The Certification of Green Technology was launched in 2010 by the Korean government, and is awarded to technologies that contribute to conservation of energy and resources, and reduction of GHG emissions and pollutant discharges by improving energy efficiency and utilizing clean energy sources. LGE acquired the Certification of Green Technology for 11 technologies in 2010 and two in 2012. (URL ▶www.greencertif.or.kr/eng)

2012 LG Electronics Environmental Report 35 Green Technology Certification Acquired Models (as of December 31, 2012) Technology Date Certified Valid Until Parallel two Evaporator Cycle Technology 2010.5.27 2014.5.26 Inverter Linear Compressor Technology 2010.5.27 2014.5.26 Dual Injection Steam Wash Technology 2010.5.27 2014.5.26 Ultra Energy-Saving Technology Utilizing High-efficiency Inverter Compressor for Air 2010.6.9 2014.6.8 Conditioners and PIR Sensor High-efficiency VRF21 Technology for Air Conditioner 2010.6.9 2014.6.8 World's First '6 Motion' Wash Technology 2010.6.9 2014.6.8 Washing Machine Capacity Expansion Technology Utilizing Wash Tub 2010.6.9 2014.6.8 Smart Plasma Display Panel Technology 2010.6.9 2014.6.8 Stand-by Power Technology that Enables Consumption of less than 0.9W for Microwave 2010.6.9 2014.6.8 Ovens Design Technology for LED Flat Panel Lighting of High-efficiency/ High Quality Color Rendering 2012.8.30 2014.8.12 Manufacturing Technology for 130 micron-level Ultra-Slim, High efficiency Crystalline Silicon 2012.8.30 2014.8.12 Solar Cells (Selective Emission / Compensation for Rear Defects/ Reflective Layer Formation) Compressor Technology for Water Purifiers 2012.8.30 2014.8.29 Spray-free molding Technology 2012.8.30 2014.8.29

Compressor Technology for Water Purifier (certified on August 30, 2012) 1 1_ Water Purifier with “Compressor This technology applies LGE’s proprietary compressor technology developed for Technology” (Model : WHD71RW3R 2_Vacuum Cleaner with refrigerator products to water purifiers, achieving the country’s lowest power con- "Spray-free Molding Technology" sumption in Korea when launched, and acquiring the Grade 1 energy efficiency (For Korean market, model: VC4001LHAY) label. Also, the technology utilizes the natural gas-based refrigerant R600a (isobu- 1 3_ Vacuum Cleaner with 22 "Spray-free Molding Technology" tane ) instead of R134a. (For U.S. market, model: VF5112JC)

2 Spray-free Molding Technology (certified on August 30, 2012) Plastic products undergo a spray coating process for high gloss metal finish, which produces chemical substances including VOC23 and consumes a large amount of power. To address these issues, LGE developed the Spray-free Molding Technol-

ogy, a process that forgoes the spray coating and acquires desired colors and gloss 2 3 finish by incorporating pearl materials in the plastic molding process.

21) VRF : Variable Refrigerant Flow 22) Isobutane : A colorless natural gas that is not harmful to the human body used as a substitute for the traditional refrigerant 'Freon' for refrigerators and air conditioners. 23) VOC (Volatile Organic Compound) : A carcinogenic substance that causes problems in the nervous system when in contact with skin or respiratory organs; it also causes global warming.

LGE Lights Up the World through Appropriate Technology

Also called 'the technology for the alienated 90%', the Appropriate Technology is for under-developed countries unable to enjoy the ben- efits of science and technology, and features low energy consumption, low investment, and is easy to use for everyone. In 2012, LGE, in cooperation with the Korean NGO, Good Neighbors, donated its Solar Multi-Charger to two areas of Malawi, Africa. Local communities with no other form of power supply use this technology to easily charge their mobile phones.

36 special page LGE's Energy-efficient Products

LGE is striving hard to develop products with lower power consumption and standby power. Assuming that a household uses 6(below) of LGE products newly released in 2013, the energy consumption is lower than use of 2012 models and that corresponds to total 957 of pine trees planting.

T2150GE502B. FNQ166DURW FR47C5NQ1Z R-F874VBSG ALWAKA1(5000K)

pine pine pine pine 824 trees 59 trees 21trees 38 trees

* The reference models (released in 2012) were : TV : 55LM7600, Washing Machine : F4999MT1Z, Refrigerator: R-U913LBRD, VH9200D 55LA7400 Air Conditioner: FNQ165DALW, Cleaner : VH9000D, LED : FLR32SSEX_N/A

* The calculations of annual power consumption and CO2 emissions were based on the Guidelines for Carbon Footprint for Products (2013, Korea Environmental pine pine Industry & Technology Institute) trees trees - Emission coefficient : 0.495kgCO2/KWh 6 9 * The calculation of pine tree planting was based on the guidelines from Korea Forest Research Institute regarding carbon absorptions by trees. * According to revision of KSC9306, calculation reflects revised condition for use temperature and time (Monthly power consumption : 77.3KWh/month)

2012 LG Electronics Environmental Report 37 05Green Partnership 1 Green Program Plus 2 Supplier Training 3 Green Partnership Activities

1. Green Program Plus

“Green Program Plus (GP Plus)” is LGE’s own green management program for suppliers. First * LGE Green Partnership Based on strong partnerships with suppliers, implemented in 2005 to respond to regulations on managing hazardous substances, the pro- LGE is funding mid to long term R&D gram has been expanded to parts procurement and GHG emissions management and includes projects for new businesses such second-tier and third-tier suppliers as well as primary suppliers. In accordance with internal green as LED and photovoltaics till 2015 management standards, LGE also validates and evaluates green management system and the (KRW 8 billion). Additionally, it provides suppliers with opportunities to capacity of existing and new suppliers. make business suggestions via the Open Innovation website (www.col laborateandinnovate.com) and provides necessary support to develop business opportunities from their technologies

Green Program Plus/Assessment Criteria New Suppliers Existing Suppliers Green Management System 20 Green Management 50 Open Innovation Website Management of Hazardous Supplier Management 15 50 Substances Inspection Management 35 Management of Material/ Voluntary Phase-out of PVC/ 5 30 Product BFRs management (Extra Point)

38 2. Supplier Training

LGE provides annual training on GHG emissions management and hazardous substances management to suppliers and LGE employees. In 2012, 228 supplier staff members (Green Expert Program) and 117 LGE employees (Green Auditor Program) completed the training. Number of Green Certified Companies (Cumulative) Course Training Unit : No. of Suppliers Round Trainee Content of Training name Period companies newly 1st : 0 3.11-13 ·Overview of 162 2nd: 04.08 - 10 ·Supplier's Green registered in 2012 Green 228 environmental 3rd : 05.06 - 08 Program Expert per- regulations 4th : 06.17 - 19 ·staff and ·Hazardous Program sons 4,503 5th : 07.03 - 05 managers substance manage- 4,341 6th : 0 8.05 - 07 ment and analysis 3 days 4,172 ·QA staff technology 1st : 03.07 - 09 ·Specification staff ·Responsive system Green 2nd: 03.12 - 14 117 ·Parts developing for environmental Auditor 3rd : 04.18 - 20 per- staff regulations (HSMS) Program 4th : 08.27-29 sons ·Suppliers' green ·GHG Emissions 5th : 10.17 - 19 program auditors Management 2010 2011 2012

Number of Green Experts (Supplier) and Green Auditors (LGE) (Cumulative) Unit : No. of Experts / Auditors

Green Experts Green Auditors

2010 2011 2012 2010 2011 2012

729 814 1,042 1,379 1,630 1,747

228 persons 117 persons completed the training completed the training course in 2012 course in 2012

Supplier Code of Conduct

In 2012, LGE distributed the updated Supplier Code of Conduct to its suppliers. The updated code added provisions for responsible raw material purchase with regard to logging.

5. Materials obtained from mining 5. Materials not obtained through illegal Suppliers shall evaluate the origin or and unethical ways source of their materials throughout Suppliers shall evaluate the origin or source of Before After their supply chains to verify that they their materials throughout their supply chains have not been obtained through any to verify that they have not been obtained illegal form of mining (e.g., materials through any illegal and unethical ways. Form obtained from the Democratic Repub- of mining (e.g., materials obtained from min- lic of Congo). ing in the Democratic Republic of Congo or an adjoining country, fibers obtained from logging in high conservation value forest areas or prohibited areas).

2012 LG Electronics Environmental Report 39 3. Green Partnership Activities

Green Growth Support Program Since 2011, LGE has been sponsoring the preliminary social enterprise through Green Growth Support Program led by the Social Solidarity Bank. This program aims to find and support social enterprises in 6 business areas (renewable energy, energy efficiency improvement, recycling and waste, organic food, IT-based green growth, and other environment-related businesses), and is cooperated by LGE, the Ministry of Employment and Labor, the Ministry of Environment, and other concerned govermental agencies. LGE provided total of KRW 2 billion of financial support to the chosen social enterprises, and also held the Eco-nomics Monthly Seminar to share the know-how of the social enterprises and exchange information to strengthen their business.

Eco-nomics Monthly Seminar

LGE Green Growth Support Program Interview 1 / Heuksalim Food

Heuksalim Food is a company that develops technologies regarding organic farming. We also distribute and sell the products to which those technologies are applied. Initially, we started our business of developing organic farming technologies, but later expanded the business scope to marketing and sales. Thus, because of the lack of knowledge in the field, we were having dif- ficulties running a business. Fortunately, we got a chance to be supported by LGE through Green Growth Support Program. Thanks to the financial aid that LGE offered us, we were able to buy some necessary equipment and facilities. For example, we could increase our productivity dramati- cally through automatic labeling machine supported by LGE. In addition, LGE, provided us a free Tae Geun Lee, President of consultation regarding process control, oper- Heuksalim Food ating procedures, and workplace layout, etc. In the past, for example, because we have only one entrance, it was difficult to distin- guish goods in stock and finished goods. By improving the layout of the workplace, as LGE advised us to do, we could solve the problem. Through LG Green Growth Support Program, all of our members including me The Package of Organic Vegetables by became big fans of LGE. / Heuksalim Food

40 Green Growth Support Program Interview 2 / ecojun company

ecojun company is a design firm that develops and sells products that consider both environment and design. Among a variety of its products, the ‘Original Green Cup’ is the ecojun’s flagship product. It is made from corn starch which makes it biodegrad- able. Also, there’s a small hole in the cup in order not to let the tea bag falls inside the cup. In addition, ecojun hires disabled people in some of the production processes. However, due to the small Jun Seo Lee, President of ecojun company production, high price, and low brand awareness, our products didn’t have a chance to appeal to the customers. At that time, fortunately, LGE provided us financial support to apply for international design award. Starting with Red Dot Design Award in 2012, we won the three international design awards including International Forum Design Award, and International Design Excellence Award. These ecojun’s Original Green Cup tangible outputs immediately led to the increase of the sales, giving ecojun company’s revenue two times higher in 2012 compared to the previous year. Thanks to the support of LGE, we could stay in business which creates environmental and social values to customers. /

Green Purchasing

As the primary company that has agreed to the industrial Green Purchasing Agreement led by the Ministry of Environment and the Korea Environment and Industrial Technology Institute (KEITI), LGE voluntarily buys products with Eco-Labels. In 2012, LGE purchased approximately KRW 2.5 billion of products with Korea Eco-Label.

LGE's Green Purchasing Unit : KRW 100 Million

2010 25.11

2011 25.35

2012 24.99

0 10 20 30

2012 LG Electronics Environmental Report 41 Resource 06 Recycling 1 Use of Recycled Plastics 2 e-waste Management · e-waste Take-back · e-waste Management and Recycling Activities

1. Use of Recycled Plastics

As a way to increase resource recycling, LGE uses recycled re- Annual Recycled Plastics Consumption Unit : Ton sources such as recycled plastics in its products. As a result, the 4,980 amount of recycled plastics used by LGE witnessed a steady 3,298 2,014 growth : 2,014 tons in 2010, 3,298 tons in 2011, and 4,980 tons in 2012.

2010 2011 2012

Recycled Plastics Used in LGE Products

5.8% 10.7% 12.3% 20.1% 46.3%

Refrigerator Dish Washer Air Conditioner Mobile Phone Monitor LFX31925ST LDS5540 SNC066BAW W1946 LS696

* Means the recycled plastics used in proportion to the total plastic used in the product

42 2. e-waste Take-Back

e-waste Take-back LGE collects e-waste in accordance with the local electrical and electronic equipment (WEEE) regulations and requirements around the world. The company also maintains a website that offers information on its e-waste take-back system and related activities (URL▶ www.lg.com/global/sust ainability/environment/take-back-recycling). LGE also performs ongoing monitoring on new regulations and make proper responses. In 2012, LGE implemented an e-waste take-back and recycling program in countries such as China, India and Australia. LGE is also establishing a take-back system in countries planning to implement the WEEE regulations in 2013 and maintain open dialogue with governmental and industry organizations to facilitate e-waste collection and recycling.

e-waste Take-back by Country Unit : Ton * The numbers for some European Korea countries are estimated values. * Australia has enforced the regula- 188,264 Japan tions since July 2012. 174,482 Europe 6,152 208,909 U.S. 668 3,685 Australia 17,760 132,279

158,209 108,824 4,252

3,603 3,295 45,581 43,412 43,935

2010 2011 2012

Warranty and Parts Holding Period

LGE believes that one way to practice green- Product Warranty Period Parts Holding Period management is to reduce e-waste by prolong- Mobile Phone 1-2 years 3-5 years ing product life. As part of this effort, LGE established and managed warranty and parts TV 1-3 years 7 years holding periods as specified on the right. Air Conditioner 1-5 years 7 years Washing Machine, 1-3 years 7 years Refrigerator, etc.

2012 LG Electronics Environmental Report 43 e-waste Management and Recycling Activities Korea / Establishment of Take-back System for Small Household Ap- pliances LGE installed an e-waste collection box (for small household appliances) at over 650 brand stores nationwide to provide free take-back service to visiting customers. In Korea, customers have to pay a fee when they want to dispose e-waste. With LGE’s e-waste collection boxes at neighborhood stores, however, customers can dispose e-waste conveniently for free. Through this program, LGE increased customer convenience and contributed to the promotion of e-waste recycling for small appliances. In 2013, LGE plans to further expand the program through its service center network.

Small e-waste collection box installed in a shop

Overseas / LGEUS (U.S. Subsidiary) Recycling Program Website In 2012, LGEUS renewed its Recycling Program website (www.lgrecyclingprogram. com). The new website allows customers to check the location of over 200 eCycling centers nationwide and reports the amount of e-wastes collected for the year to date, including the percentage of each product category out of the total e-waste collected. A Q&A section is also available for customers to make inquiries related to electronic product recycling.

LGEUS e-waste Take-back Program Website

44 special page Green Initiatives at LGEUS

It is a great pleasure to introduce our environmental sustainability program at LGE U.S. subsidiary (LGEUS). In 2012, we carried out a wide range of projects and activities to help do our part in protecting the environment and promoting energy efficiency. A few of our key initiatives included. /

Sustainability & CSR Manager LGEUS Christine Ackerson

Partnering with the U.S. Environmental Protection forces with the EPA as a charter participant in the EPA’s sus- 1 Agency (EPA) In 2012, LGEUS teamed up with the tainable Materials Management Electronics Challenge. The EPA on a series of voluntary initiatives, including programs company has voluntarily committed to sending 100 percent of to promote energy efficiency, reduce waste and use renew- used electronics collected for reuse and recycling to third-party able energy. We have established a detailed action plan over certified recyclers, increasing the total amount of used elec- the next five years to address a broad array of environmental tronics collected for reuse and recycling, and publicly posting stewardship programs that will help us to reduce our carbon information and data. footprint and protect the environment. EPA offers easy to use Implementing a Nationwide Public Education and tools and resources in over 40 pollution prevention and energy 4 Community Outreach Campaign about ENERGY STAR conservation programs that LG can use to help us reach our goals LGEUS partnered with the EPA’s ENERGY STAR program to ed- ucate customers on energy efficiency and empower customers Teaming up with Key Non-Governmental Orga- to make informed choices about their electronics and appli- 2 nizations (NGOs) to Promote Energy Efficiency ance purchases. Through aggressive media relations, advertis- LGEUS worked with several NGO’s in 2012 to identify opportu- ing, social media and high-profile customer events, LGEUS was nities for collaboration on policy initiatives with advocates who able to reach more than a billion customers with ENERGY STAR help shape federal policy and public dialogue around energy messages. efficient products. For instance, LGEUS spoke at the Alliance to Save Energy’s Great Energy Efficiency Day, which attracted about 400 stakeholders from business, government, academia and media. LGEUS also hosted an energy efficiency leadership workshop in December 2012 with five key NGOs, including the American Council for an Energy Efficient Economy and the U.S. Green Building Council. Participants of the meeting had an open dialogue about a range of topics including ideas for future collaboration between LG, the U.S. government and 1 _ LGE-EPA MOU Signing Ceremony 2 _ 2012 Launching Ceremony of Great American Clean Up NGOs; technical, economic, and political factors that have an (April 2012, Time Square, New York) impact on high efficiency products; and opportunities and bar- riers to developing energy efficient products. 24) LEED (Leadership in Energy and Environmental Design): Developed by the Continuing Strong Leadership in Recycling Efforts 3 U.S. Green Building Council (USGBC), LEED is a rating system for the design, LGEUS collected and responsibly recycled 17,760 tons construction and operation of high performance green buildings, homes and of unused and unusable electronics in 2012, up from 6,152 neighborhoods. The USGBC assesses a building’s design, construction, opera- tons in 2011. As an official sponsor of the U.S. based Non- tions and maintenance solutions and awards four types of certifications based profit Organization Keep America Beautiful (KAB), LGEUS on the combined score (LEED : 40-90 points, LEED Silver: 50-59 points, LEED participates in diverse events and initiatives organized by KAB Gold : 60-79 points, LEED Platinum : 80 and higher) to promote electronics recycling. Building on its leadership in 25) Clean Construction USA: An EPA program designed to promote the reduc- responsible electronics recycling, in September 2012 LG joined tion of diesel emissions from construction equipment and vehicles

Green Offices& Landscapes LEED24 Certification for LGEUS HQ Product Stewardship Energy Management& ENERGY STAR

25 Green Transportation Clean Construction USA

Green Energy Wasre Reduction & Recycling Collaborate on Environ- Environmental Education Water Use Management mental and Energy Man- agement Best Monitering & Report Practices Green Transportation APPENDIX

Data

GRI Index

Independent Assurance Statement

Green Management History

Publications of LGE Environmental Report Data

Input Data

GHG Emissions Unit : K Ton CO2e Energy Unit : TJ

Category 2010 2011 2012 Category 2010 2011 2012 Scope1 118 145 145 Electricity 5,911 6,056 6,093 Korea Scope2 516 534 517 Steam 582 807 770 Scope1 303 297 264 LNG 1,178 997 1,202 Overseas Scope2 363 385 425 Coal 1,152 1,223 1,160 Total 1,300 1,361 1,351 Others 302 353 409 Intensity Total 9,125 9,436 9,634 2.33 2.51 2.65 (K ton CO2e/KRW 100 billion) * Applicable business sites : 14 Korean (production, office and R&D centers) * Applicable business sites : 14 Korean (production, office and R&D centers) and 30 overseas (production) sites. and 30 overseas (production) sites * Applicable energy usage : Combustion facilities in business sites, and exter- * Based on the 2006 IPCC Guidelines for National Greenhouse Gas Invento- nal electricity and heat usage (energy consumed by vehicles excluded) ries, the WRI’s GHG Protocol, etc. * Energy consumption is calculated based on net heating value. * Verification status : Korea : Third party verification completed (2008-2012), * Verification status. except for refrigerant emissions Korea : Third party verification completed (2008 - 2011), except for refriger- Overseas : Third party verification completed (2008-2011), except for LGEAT ant emissions and Third party verification completed (2012), except for LGEWR, LGEND and Overseas : A third party verification completed (2008 - 2010), except for LGEVN LGEAT and LGEQA * Data correction may occur after the completion of third party verification. * Data correction may occur after the completion of third party verification.

Unit : Ton CO2e Ozone Depleting Chemicals Unit : Ton Category 2010 2011 2012 Category 2010 2011 2012

Leased Properties 7,673 7,987 9,377 Korea 1,509 1,070 772 HCFC (R22) Domestic Overseas 3,023 2,881 2,548 Scope3 Logistics 86,210 95,282 42,344 Total 4,532 3,951 3,320 (Transport)

Business trips 84,425 62,153 72,400

* Verification Status : Third party verification completed (2009-2012) for leased properties and business trips

Water Use Unit : Ton Category 2010 2011 2012 Korea 5,914 6,373 5,498 Overseas 6,214 6,540 6,046 Total 12,128 12,913 11,544 Base Unit 2.18 2.38 2.27 (K Ton CO2e/KRW billion)

2012 LG Electronics Environmental Report 47 Output Data

Air Emissions Unit : Ton Waste Generation Unit : Ton Category Region 2010 2011 2012 Category Region 2010 2011 2012 Korea 1.8 3.3 2.2 Korea 37,529 38,739 30,332 NOx Overseas 114.1 79.0 74.3 Recycle Overseas 80,472 81,124 83,000 Total 115.9 82.3 76.5 Total 118,001 119,863 113,332 Korea 0.4 0.6 0.8 Korea 6,452 6,848 7,012 SOx Overseas 89.1 47.6 46.7 Landfill Overseas 1,166 2,300 7,004 Total 89.5 48.2 47.5 Total 7,618 9,148 14,016 Korea 5.0 7.5 7.3 Korea 4,368 5,437 5,432 Incinera- Dust Overseas 80.7 58.1 66.5 Overseas 40,434 40,726 30,662 tion Total 85.7 65.6 73.8 Total 44,802 46,163 36,094 Korea (ppm) 16.4 11.1 9.4 Korea 45,883 48,490 39,636 VOCs (General) Overseas (ton) 21.8 30.3 30.3 Korea 2,466 2,533 3,140 * Since there is no standard for VOC measurement in Korea, this report (Regulated) Total presents the average concentration of Total Hydrocarbon (THC) in ppm from Korea Total 48,349 51,023 42,776 some of our painting facilities Overseas Total 122,072 124,150 120,666 Total 170,421 175,173 163,442 Discharge into Water Unit : Ton Category Region 2010 2011 2012 * Our 2012 data includes the waste generated from R&D centers. Due to the close down of the Gumi 2 Plant, our performance in recycling declined com- Korea 1.3 0.9 0.6 pared to the previous year, while the amount of incineration increased. T-P Overseas 0.5 1.3 2.0 * The amount of incineration increased overseas due to changes in the waste Total 1.8 2.2 2.6 management laws in Manaus, Brazil. Korea 58.0 49.4(36.6) 53.3 * Incineration also includes heat recovery. * For hazardous wastes, this report only presents the data from Korea, as the T-N Overseas 5.3 2.5 9.5 definition of hazardous wastes varies by country. Total 63.3 51.9 62.8 Korea 38.8 14.6(12.9) 18.0 SS Overseas 30.5 49.7 43.2 Waste Water Discharge Unit : Ton Total 69.3 64.3 61.2 Category 2010 2011 2012 Korea 106.8 96.3(77.8) 128.6 Korea 3,922,150 4,140,130 3,783,044 COD Overseas 99.2 108.5 107.8 Overseas 1,493,185 1,451,776 1,252,379 Total 206.0 204.8 236.4 Total 5,415,335 5,591,906 5,035,423

* The numbers in parenthesis “( )” indicate an error in the disclosed data from * The amount of waste water discharge sharply decreased in Korea due to the the 2011-2012 report. The values have been adjusted to correct the errors iden- close down of the Gumi 2 Plant. tified in the verification process.

48 GRI Index

LGE's Environmental Report refers to the GRI(Global Reporting Initiative) Sustainability Reporting Guidelines Version 3.1.

Application GRI Index Related Contents Page level EN1 Materials used by weight or volume ○ Corporate Profile, Data 5, 47-48 Products and Technologies, Resource EN2 Percentage of materials used that are recycled input materials 31, 42 ○ Recycling EN3 Direct energy consumption by primary energy source ○ Data (Energy) 47 EN4 Indirect energy consumption by primary source ○ Data (Energy) 47 EN5 Energy saved due to conservation and efficiency improvements ○ Climate Change Response, Data (Energy) 18-23,47 Reductions in energy requirement as a result of energy GHG Emissions Management (Production 19-20, EN6 efficient or renewable energy initiatives ○ Level), Products and Technologies 28-37 Initiatives to reduce indirect energy consumption and GHG Emissions Management EN7 21 reductions achieved ○ (Product Life Cycle) EN8 Total water withdrawal by source ○ Water Use Management, Data (Water Use) 21, 47 EN9 Water sources significantly affected by withdrawal of water × - EN10 Percentage and total volume of water recycled and reused ○ Water Use Management 21 EN11 Location and size of areas of high biodiversity value ○ EN12 Description of significant impacts of activities on biodiversity ○ LGE’s facilities are located in industrial EN13 Habitats protected or restored ○ complexes. Strategies, current actions, and future plans for managing EN14 impacts on biodiversity ○ Number of IUCN Red List species and national conservation EN15 N/A Data not available list species EN16 Total direct and indirect greenhouse gas emissions by weight ○ Data (GHG Emissions) 47 EN17 Other relevant indirect greenhouse gas emissions by weight ○ Data (GHG Emissions) 47 Initiatives to reduce greenhouse gas emissions and reductions GHG Emissions Management EN18 19-20 achieved ○ (Production Level) EN19 Emissions of ozone-depleting substances by weight ○ Data (Ozone Depleting Chemicals) 47 NOx, SOx, and other significant air emissions by type and EN20 Data (Air Emissions) 48 weight ○ EN21 Total water discharge by quality and destination ○ Data (Discharge into Water) 48 EN22 Total weight of waste by type and disposal method ○ Data (Waste Generation) 48 EESH Management, None of significant EN23 Total number and volume of significant spills 81* △ spills occurred in 2012. Weight of exported, imported, transported, or treated EN24 - - hazardous waste under the terms of Basel Convention × Identity, size, and protected status of water bodies and EN25 - - related habitats × Green Initiative, Climate Change Response, Initiatives to mitigate environmental impacts of products and EN26 Green Business, Products and Technologies, 10-45 services △ Green Partnership, Resource Recycling EN27 Percentage of products sold and their packaging materials ○ Products and Technologies(Packaging) 30 Monetary value of significant fines for noncompliance with EESH Management, None of significant EN28 81* environmental regulations × spills occurred in 2012 Significant environmental impacts of transporting products GHG Management (Production Level), EN29 19-20 and other goods ○ Data (GHG Emissions) EN30 Total environmental protection expenditures and investments ○ Promotion of Low-carbon Culture 22 · The page numbers with a mark "*" indicate that related data are available in LGE's Sustainability Report. LGE Sustainability Report : http://www.lg.com/global/sustainability/communications/sustainability-reports

2012 LG Electronics Environmental Report 49 Independent Assurance Statement

LGE commissioned the Korea Productivity Center (the “Assurer”) to provide an independent assurance of its 2012 Environmental Report (the “Report”).

Responsibility and Independence LGE is entirely responsible for the reliability and accuracy of all information and opinions presented in this “Report”. The Assurer is responsible only for the environmental verification provided in the Report. As an independent assurance agency, the Assurer was not by any means involved with preparing this “Report” and maintains no relationship with LGE that can undermine its integrity.

Assurance Standard and Objectives The assurance was undertaken in accordance with the AA1000 Assurance Standard (2008) to provide a Type 1 moderate level of assurance. This is achieved through the evaluation of the organization’s adherence to the AA1000 Accountability Principles Standard (2008) of Inclusivity, Materiality and Responsiveness. Additionally, for the assurance of LGE’s approach to environmental assertions in marketing, Federal Trade Commission of the United States complying with the Environmental Marketing Guide section 260 and ISO14021 have been used.

Assurance Limitations Based on the assurance in accordance to the organization’s environmental performance during 2012 was performed, however the boundary of assurance did not include the reliability of data which is publicly disclosed within public domains and information linked with LGE’s website.

Assurance Methodology The assurance was undertaken following the methodology specified below: 1. AA1000APS (2008) review and process of Inclusivity, Materiality, and Responsiveness based on LGE’s report. 2. The information contained within the report on the suitability and expressions of error with comparison with other sources of error analysis have been verified. 3. Verified the bases of key data and information presented by performing onsite verification at LGE’s Umyeon R&D campus through an internal process for identification have been confirmed

Findings and Conclusions This report is the assurance of LGE’s environmental management activities and reflects the integrity fairly and accurately, while presenting the environmental performance. In addition, the validation criteria findings and recommendations based on the AA1000 Accountability Principles (2008) of Inclusivity, Materiality and Responsiveness are as followed:

> Inclusivity : Stakeholder Engagement The principle of inclusivity articulates that organizations should include stakeholders in developing and achieving an accountable and strategic response to sustainability. In order to increase the performance of environmental management and high-value products, LGE’s process of develop-

50 ing a variety of stakeholder engagement must be reaffirmed, including employees. A variety of stakeholder engagement and environments were well presented through the Green Technology Committee for green management by LGE. With future stakeholder engagement and comments reflecting specific practices and information on the process of improvements in terms of compre- hensiveness will present a clearer and concise report.

> Materiality : Selection and Reporting of Material Issues The principle of materiality articulates that organizations should focus on issues relevant and material to both the organization and its major stakeholders. The report confirms LGE identifies material issues related to the environment both home and abroad. The green management system established by LGE is based on the response to climate change and to promote green businesses as well as green growth. Also, LGE is actively searching for alternative developments of green products in terms of resources, information, and technologies through strategic expansion. How- ever, background information will need to be supplemented to understanding the purpose of promoting the environment and material issues for green management to key stakeholders

> Responsiveness : Organizational Response to Issues The principle of responsiveness articulates that organizations should be responsive to issues that may have impacts on stakeholders’ performance. The activities and performances by LGE within the report actively respond to relevant issues and have been confirmed in the report. Especially with regards to resource recycling and the use of recycled plastic, such as the collection of waste generated from the production of electronics, LGE excelled during the development, management, and consumption stage to consider its sustainability activities to be later evaluated. Future purchases of products from raw materials to the recovery phase of the life cycle of a product to environmental issues arising from company activities and achievements are associated with the material issues are expected to be reported.

July 2013 Chairman Korea Productivity Center Hong Jin

Dongsoo Kim, Yang Ho Lee, Tae Min Kim, Director Team Leader Researcher Sustainability Management Center Sustainability Management Center Sustainability Management Center

Korea Productivity Center’s Sustainability Management Center is an assurance agency officially certified by Ac- countAbility, which established international standards for stakeholder participation and verification AA1000, and has qualifications to perform an independent assurance engagement. Our Assurance Committee is also comprised of competent experts who have ample experience in sustainability management consulting and assurance and completed relevant professional training.

2012 LG Electronics Environmental Report 51 Green Management History

Since declaring its environmental policy in 1994, LGE has made tireless efforts toward Greenovation to reduce its environmental impact across its business activities and fulfill its customer value through developing various products with greener features.

1992· Established an environmental committee 1994 Announced an environmental policy ‘Cleaner Environment’ 1990's · 1995·Achieved company-wide ISO14001 certification 1996·Implemented Life Cycle Assessment 1999·Received the European environmental mark, the ‘Eco Flower’ for monitors : continuative 2000's 2007 2008

2002 · Estalished Green Technology 2007 · Developed GHG emission 2008 · Created the Eco Strategy Team Committee calculation system · Established GHG inventories for 12 domestic · Opened a hazardous substance · Established a voluntary factories and received third-party certification analysis laboratory mobile phone waste take- · Established EMS (Environmental Management 2004 · Introduced LGE’s Green Program back system in 45 countries System) for suppliers for suppliers · Started a Photovoltaics · Received CDP Korea K-CDP Award (Woorim) 2005 · Announced the completion of business group and · Received Carbon Footprint pilot certification the EU RoHS response system established a photovoltaic for drum washing machines · Received official hazardous power-generation system · Established a voluntary e-waste take-back substance analysis laboratory · Received the Presidential system in U.S. certification (UL) Prize at the National 2006 · Developed Eco Index and Environmental Management established an evaluation system Award (Air Conditioner)

2012 2011 2010 2010's 2009

· Supported the UNEP ‘Champions of the Earth’ (3 consecutive years) · Named as a member of the Carbon Management Global Leaders Club by CDP Korea (4 consecutive years)

2012 · Received a certificate for 2011 · Changed name of the 2010 · Announced Green 2020 2009 · Voluntarily announced GHG photovoltaics test laboratory team to Green Strategy by LG Group reduction goals (TÜV Rheinland) Department · Established an integrated · Established GHG inventories for · Received 2011 ENERGY STAR · Acquired 2011 certified laboratory in a domestic and overseas business sites Partner of the Year ENERGY STAR Most ‘Green Energy Testing (12 domestic, 29 overseas) · Acquired 2011 ENERGY STAR Efficient Certification Lab’(UL) · Approved as an ISO17025 internationally Most Efficient Certification (13 models) · Supported the UNEP certified testing laboratory (organiza- (79 models) · Received the Presidential ‘Champions of the Earth’ tion recognized in Korea) for precision · Packaging Improvement (Saved Prize at the 2011 Global · Launched the water treat- analysis of hazardous substances KRW 10.9 Billion in TV and 3.7 Green Management ment solution business · Joined UNGC billion in mobile phone) Excellence Awards · Started using Eco-magnesium · Named as a member of the Carbon · Carbon Label : Greenhouse Gas (Washing Machine) for mobile phones Management Global Leaders Club Emissions Certificate (48 models), · Selected as the world’s first by CDP Korea (4 consecutive years) Low Carbon Product Certificate green products at Maison & · Participated in the smart grid demonstra- (10 models), CarbonFree® (15 Objet (Refrigerator) tion consortium as a major participant models), and Climatop (2 models) · Received the Presidential Prize at the · Received Global Efficiency 2009 Global Green Management Medal by SEAD (TV) Excellence Awards (Refrigerator) · Achieved company-wide · Released solar charged mobile phone, ISO50001 certification GD510

52 Publications of LGE Environmental Report

2008 Environmental Report 2009 Environmental Report 2010 Environmental Report (Published in July 2009) (Published in June 2010) (Published in July 2011)

LG Electronics 2011 Environmental Report

2011 Environmental Report 2012 Environmental Report (Published in July 2012) (Published in July 2013)

For additional information or opinions about the environmental report, please contact the address below. Green Strategy Department, LG Electronics, 38 Baumoe-ro, Seocho-gu, Seoul, Korea 137-724 Tel. +82-2-526-4123 Fax. 02-526-4680

LG Electronics Website www.lg.com/global Blog (Korean) http://social.lge.co.kr E-mail [email protected]

Designed by_intoGraphic 02-583-7688 This report is printed on FSCTM (Forest Stewardship Counciltm) certified paper with soy ink.